More than 170 different oils are traded on the market, but in this article we will focus on the three major oils that usually attract the most attention, both in the news and in the markets around the world.
First is West Texas Intermediate (WTI) is a crude oil of extremely high quality and because of this property, it is possible to extract more gasoline from a single barrel compared with most other crude oils traded on the market. The WTI has an API gravity of 39.6 degrees, which gives the oil the characteristic of “light”; moreover the concentration of 0.24 percent of sulfur makes it a “sweet” crude oil.Those qualities together with the extraction location, make the WTI the prime crude oil refined within the United States, which is the largest gasoline consuming country on the?planet. The vast amount of the WTI is refined mainly in the Gulf Coast and in the Midwest regions.?Because of its characteristic, the WTI crude oil, is usually priced higher than the other two main traded oil: respectively $5-7 per barrel higher than the OPEC basket and $1-2 more than the “Brent Blend”.
The term “API Gravity” refers to the “American Petroleum Institute Gravity, and it is a measure that analyzes how heavy or light the oil is compared to the water. If an oil shows an “API Gravity” value greater than 10, then the crude oil will float on the water being lighter. If an oil “API Gravity” is below 10, it means that the crude oil is heavier than water and therefore will sink.
Second, Brent Blend is a combination of different types of crude oils, which are extracted from 15 fields throughout the Nynas system, located in the North Sea, and the Scottish Brent. The
“API Gravity” of this particular oil is 38.3 degrees: this characteristic makes it a “light” oil similar to the WTI, but not as much as the WTI. In the same way, the quantity of sulfur contained (0.37 percent), makes it a “sweet” crude oil, but not as “sweet” as the WTI.
Brent Blend properties make this crude oil excellent for the production of gasoline and middle distillates, which are most used in North-West Europe. As for the WTI, the production of the Brent is in a declining trend, but remains one of the major benchmarks to analyze the price of crude oils both in Europe and in Africa. Usually the price of the Brent is approximately $4/barrel higher than the OPEC Basket price and $1-2 lower than the WTI.
And the last one is OPEC Basket Oil price. This is a weighted average of prices for petroleum blends produced by OPEC countries. The basket is composed of 11 different types of crude oils from Algeria, Saudi Arabia, Nigeria, Venezuela, Ecuador, Iran, Iraq, Kuwait, Libya, Qatar, UAE and Angola. The acronym OPEC means “Organization of Petroleum-Exporting Countries” which is an organization that was created in 1960 to generate common policies for the production quotas and the sale prices among its members.
Compared with the WTI and the Brent Blend, the OPEC oil contains a higher percentage of sulfur and therefore is not as “sweet” as these oils; moreover, the OPEC oil is not naturally “light” as the WTI or Brent. Because of these two reasons, the quantity of gasoline that is possible to extract from this oil is lower, thus the prices of OPEC oil are normally lower than the WTI or Brent.